KUALA LUMPUR: Malaysian Rating Corp (MARC)has affirmed with a stable outlook and withdrawn its AA/MARC-1 and AAID/MARC-1 ID ratings on CIMB Group Holdings Bhd's  RM6.0 billion conventional and Islamic commercial paper (CP) and medium term notes (MTN) programmes.

The rating withdrawal is subsequent to the issuer's request and follows the withdrawal of the A+ rating on CIMB Group's RM3 billion cumulative subordinated fixed rate notes programme on March 9, 2010. MARC will no longer carry out surveillance on any of the said instruments which remain outstanding.

The affirmation of the ratings reflect the strong business franchise of CIMB Group, its healthy financial profile, solid dividend paying capacity of its main operating subsidiaries, improved risk management capabilities and management expertise.

Being a company listed on Bursa Malaysia, the rating also incorporates CIMB Group's good financial flexibility. MARC’s head of financial institutions ratings Anandakumar Jegarasasingam, however, adds the ratings are constrained by CIMB Group’s still evolving business and risk profile as a regional banking group and the potential for performance volatility.

This due to the less stable economic and financial environment in its key overseas markets, as well as uncertainty in the pace of domestic economic recovery.

Nevertheless, the withdrawal of the ratings with a stable outlook reflects MARC’s expectations that CIMB Group's subsidiaries would not be seriously affected by the lag effect of the global economic crisis, and dividends upstreamed from subsidiaries would be sufficient to cover its debt obligations.

CIMB Group is the second largest financial services group in Malaysia, with a strong business franchise in its domestic market through CIMB Bank Bhd (financial institution rating of AA+/Stable Outlook from MARC) and CIMB Investment Bank Bhd, the main operating subsidiaries of the group.

In addition, the group has over the past few years established its presence in Southeast Asia through mergers and acquisitions in an attempt to evolve into an ASEAN regional bank. The contribution of overseas businesses to the group pre-tax profits increased to 26% in FY2009 from 11% in FY2008, with PT Bank CIMB Niaga Tbk from Indonesia being the key overseas earning contributor.

Meanwhile, in Thailand, CIMB Thai Bank Public Co. Ltd remains financially weak at this stage, dragged by its poor-quality loan portfolio as reflected by a gross non-performing loan ratio of 14.9% as at end-FY2009.

The rating withdrawal affects four separate issuances with a cumulative limit of up toRM6 billion under the Conventional and Islamic CP and MTN Programmes.

These four issuances are a Conventional CP Programme of up to RM6 billion (2007/2014), a Conventional MTN Programme of up to RM6 billion (2007/2037), an Islamic CP Programme of up to RM6 billion (2008/2015) and an Islamic MTN Programme of up to RM6 billion (2008/2038).